Origin Energy Limited · ASX:ORG
Origin Energy — Macquarie Infrastructure Conference 2004
24 slides from Origin Energy's conference presentation, May 10, 2004
Slide 1: Presentation to Macquarie Infrastructure Conference
Origin energy To Company Announcements Office Facsimite 1300 300 021 Company Australian Stock Exchange Limited Date 10 May 2004 From Bill Hundy Pages 24 Subject PRESENTATION TO MACQUARIE INFRASTRUCTURE CONFERENCE Please find attached a copy of a presentation that Grant King, Managing Director is del
Slide 2: Strategic issues in the Australian energy sector
Strategic issues in the Australian energy sector
Slide 3: Origin began developing financial objectives and business strategies in the mid 90's
Origin began developing financial objectives and business strategies to respond to changes in the energy industry in the mid 90’s.... « Financial Objective - Steady and predictable cashflows - EPS growth of 10-15% pa on average « Business Strategy - Positioned in the competitive (rather than regulat
Slide 4: The key for Origin to navigate through these changing times
The key for Origin to navigate through these changing times and the multiplicity of issues...... 80 Minister calis for ene T; vo | Cumulative asset sales in the Energy shortfalls BY Market teform Australian energy sector* on the horizon Power scare for 60 ation t© Melbourne Game’ ved @in Progress Cc
Slide 5: Australian energy deregulation and gas demand forecasts
As the Australian energy industry deregulated during the 1990’s natural gas demand forecasts became ever more bullish....... Australian domestic gas consumption {petajoules per annum) 1780 The 1997 and 1999 ABARE forecasts eo 2004 significantly increased projections for gas oe 4 33 fired power gener
Slide 6: The 2003 ABARE forecast raised expectations for domestic consumption
The 2003 ABARE supply/demand forecast has again raised expectations for increases in domestic consumption...... ABARE forecasts of Australian domestic gas consumption Comparison of ABARE 2004 and 2003 forecasts (petajoules per annum) for year 2009/10 1756 — 2003 : Exports swiffer 2001 : Electricity
Slide 7: Rising US spot gas prices and projected LNG demand
Rising spot gas prices in the US and projected increases in LNG demand will influence price expectations for remote gas ABARE forecast natural gas production and use {including exports) 4,000 3,500 3,006 PJ per annum 1,000 4 500 2,500 + 2,000 - 1,506 + o> Nel A o wv a \ ~N ss Ss 8 MResidentiat @ Ele
Slide 8: Eastern Australia supply/demand analysis shows shortfall filled by contracts
7 Origin’s supply / demand analysis for eastern Australia in 2001 showed large uncontracted demand creating perceived weenes shortfall in local supply Eastern Australian gas demand Origin Energy estimates 2001 Eastern Australian gas demand Origin Energy estimates 2004 [= Uncontracted +) ME Total Con
Slide 9: Upstream industry has committed over $3 billion to new developments
Origin estimates the upstream industry has committed over $3 billion to new developments to supply these contracts... ’ Patricia/Baleen (producing) Bream gas-cap development (producing) Otway Basin onshore discoveries (producing) ‘ BassGas (under construction) ’ Minerva (under construction) CSG fiei
Slide 10: Installed capacity can supply local markets for years to come
With this installed capacity eastern Australian basins are capable of supplying local markets for years to come.......... Gas Reserves | Cooper | Gipps- | Bass / Coal | Totals | Reserves | Table compiled from (PJ) (000) Basin & land Otway | Seam cover# | ABARE and Geoscience Qid Basin Gas (years) |
Slide 11: Acreage awards, seismic and wells drilled indicate more discoveries
Acreage awards, seismic recorded and wells drilled provide lead indicators that industry expects more discoveries in central and south eastern Australia Award of offshore acreage - southern Australia 10 Permits awarded per year 2D seismic (line kilometres) 40 @ Other southern basins 8 + EXGippstand
Slide 12: Over 6,500 km of transmission pipelines added since 1995
Getting gas supplies to market has also become easier with over 6,500 kms of transmission pipelines added in eastern Australia* since 1995........ tne et Se om Darwin « Producers can increasingly target large volume customers for producer-direct sales « Increased choice shortens customers contractin
Slide 13: Electricity industry added interconnectors and new generation
The electricity industry has responded to similar challenges by adding more interconnectors and investing in new generation, increasing reliability and price convergence apes= Future interconnector: ——" ldentified potential 12 1050MW QLD 3000MW SA Snowy to NSW Regulated interconnector , S0OMW Entrep
Slide 14: Retailers responded to deregulation by diversifying
Retailers have responded to deregulation and changed their risk profile by diversifying their business Gas utilities 1995 Energy retailers 2003 Retailer Customers | Gas fired Retailer Customers | Gas fired (millions) gen. (millions) gen. Gas | Elect. | (4W)" Gas | Elect.| (MW) Gascor 1.3 - AGL 1.4 1
Slide 15: Electricity market remains in oversupply for many years
Origin believes the electricity market remains ina position of oversupply that will last many years......... . 45,006 Generation capacity and demand (MW) Electricity supply and demand in the NEM* e-———— Area of potential shortfall in 2010 EZ] Renewabies Ma Coa! 2 Gas - Int yoni Hydro EEE] Mothballed
Slide 16: Little apparent requirement for base-load plant for some time
Although there is little apparent requirement for base-load plant for some time....... 200 + & Capital Costs 150 4 250 Estimated merit order of thermal plant ~ eastern Australia ¢ Fixed Casts 100 | mSRMC Estimated fully absorbed cost ($/MWh) 50 4 o a Loy Yang A j 3 5 3 = 5 3S ay 2 z Bayswater Mt Stu
Slide 17: New gas fired generation used predominantly for peaking
New gas fired generation has been used predominantly for peaking and has created modest additional gas load.... New gas generation plant installed (MW) Gas Turbine El Combined Cycle Cum. new gas fired generation capacity (MW) 8 8 2002 [Potentiat gas usage in Power Generation EEE Coai base-load enare
Slide 18: Gas most competitive at peak and intermediate loads
Gas is most competitive at peak and intermediate loads, but low operating hours mean that gas usage is modest LRMC of generation ($/MWhr)} 17 Approximate long run marginal cost of generation by usage and fuel type $400 m Brown coai {Vic} $356 Black coal {NSW and QLD) CcCcGT $300 4 OCGT $250 4 $206 +
Slide 19: Gas competes at base-load only with a large price discount
Gas can only compete at base-load with a large discount to current delivered gas prices..... Comparison of LRMC for new generation - coal vs combined cycle gas turbine $48 $46 $44 LRMC of generation /MWhr) $42 $40 4 CCT @ $2.10/ GJ CCGT @ $3.50/GJ Brown coal Black coal Source: Basic data from ACIL T
Slide 20: A $10 per tonne carbon tax changes relative costs
A $10 per tonne carbon-tax changes the relative costs at base and intermediate loads, favouring CCGT...... 19 LRMC of generation ($/MWhr} Approximate long run marginal cost of generation by usage and fuel type $120 Carbon cost $10 / tonne @ Brown coal (Vic) Black coal (NSW and QLD} L| CCGT @OCGT $10
Slide 21: Origin continues to develop renewable energy options
20 Origin is continuing to develop its options around renewable energy MRET GWh (Total Market) Possible requirements ° 2001 | 2003 “kg 2005 2007 2009 2011 2013 2015 2017 2019 * @ Current M Tambling Recommendation Note: Tambling Recommendations as documented in “Renewable Opportunities - A Review of
Slide 22: Implications for industry from this strategic framework
Implications for industry from this strategic framework « Gas pricing will be set by the marginal producer until eastern Australian resources deplete - likely to be 15 years + in Origin’s view « Customers contracting time-frames will shorten as supply diversifies, increasing take-or-pay risk for ret
Slide 23: Implications for Origin from this strategic framework
Implications for Origin from this strategic framework ¢ Add extra resources through exploration near existing and new producing infrastructure (Otway, Bass, CSG, Perth Basin gas) ¢ Generation provides a major growth opportunity for Origin - but only if economics of long gas position are competitive
Slide 24: This _presentation:cantains the views and opisions of Origin Eneroy Bas
This _presentation:cantains the views and opisions of Origin Eneroy Bas forecasts of.energy use and related activities in Australia. In many areas & been used and are appropriately referenced. Although all: care has been ta Origin takes no responsibility. for infereaces drawn from. this data, and ta
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